International Commercial Contracts Flashcards
Why is choice of law so important in commercial contracts?
International commercial contracts have lots of complications.
Different legal systems have different outlooks on elements of contract law;
English law prohibits penalty clauses - Makdessi.
Whereas the UNIDROIT Principles only prohibits penalty clauses which are grossly excessive.
What considerations need to be taken into account in international commercial contracts?
Freedom of contract/party autonomy is the starting point. - Rome I Regulation Article 11.
Public policy concerns are important aswell.
Which laws might the parties wish to choose?
Neutral non-national laws i.e. UNIDROIT, CISG or lex mercatoria.
National laws, of just about any country (parties have autonomy).
What considerations might be given?
Access to Legal Expertise - a party may only have access to English lawyers.
Adjudicative Expertise - a major international litigation centre i.e. London might have better expertise.
Substantive Rules - i.e. penalty/liquidated damages clauses.
Give an example of a difference in substantive law.
Penalties/ Liquidate Damages clauses.
The Australian court allows the penalty doctrine to kick in even if there is no breach - Andrews v Australia and NZ Banking Group.
Makdessi - there must be a breach for a penalty - a bank overdraft is a facility (Abbey National) so no breach.
Why else might parties choose one law over another?
Avoiding burdensome laws.
Parties using English law have been concerned about the operation of UCTA with regard to exclusion clauses.
Parties may want neutrality - Abramovich v Berezovsky.
Enforceability of judgments - NY Convention countries for arbitration.
What is the benefit of choosing a more developed law?
Armin Rasheed - different systems of law are more specialised in different areas i.e. English shipping law is well developed.
English law was deemed to apply as a standard form Lloyds marine insurance contract had been used and attached to an English statute.
Kuwaiti law did not have developed marine insurance rules.
Why might parties choose non-national laws? Is it more natural to use the law of a jurisdiction?
Non-national laws are a commitment device, particularly when doing business with a government - the legal position may change.
i.e. doing business with the Russian government.
A neutral law could avoid this risk in a long term contract.
Non-national laws are also developed in a commercial context i.e. the lex mercatoria - it reflects commercial realities
What kind of public interest concerns must the choice of law take into account?
The Rome I Regulation 2008 - standardises choice of law across the EU to provide certainty.
UCTA S26 - in international supply contracts, UCTA does not apply - litigated in Amiri Flight Authority. This provision is to promote the English legal system which represents 2% of GDP.
English contract law is a worldwide commodity - Lord Falconer.
Penades Fons - English courts commonly finds that English law governs international commercial contracts.
Lord Hoffmann says that arbitration should be promoted in the UK as a business/economic consideration.
What other policy considerations come into play?
Consumer Protection Legislation is crucial and should not be avoided by choice of law.
Environmental regulations and human rights standards are also important considerations.
International relations and comity - countries should be willing to apply eachother’s laws.
What should courts really be doing?
Courts are not ‘for hire’.
They have to work by fair procedure and there are certain things which the courts won’t do i.e. applying laws which conflict with the values of English law.
How is foreign law treated in English courts?
It is treated as fact.
Experts must provide factual evidence as to whether the rules of the foreign law apply to the case at hand.
What are the guiding principles of the Rome Convention?
Party autonomy is the guiding principle.
Providing legal certainty regarding the choice of law is another important objective.
What does Article 3 Rome I Regulation say?
Freedom of choice is the starting point.
This might be by express choice, which will be clear from a choice of law clause.
It may also be clearly demonstrated (implied) by the terms of the contract or the circumstances of the case.
What features might demonstrate that the parties chose a law implicitly?
Amin Rasheed - using a standard form Lloyds marine insurance contract implied the use of English law.
The court did not buy the argument that the Lloyds marine insurance contract was used worldwide, it still implied English law.
If an arbitration clause specifies a particular country, it can be implied that this will be the governing law.
Reference to national laws i.e. UCTA will enable the courts to imply a choice of English law.
